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Radical Innovation in the Electricity Sector – Brian MOTHERWAY- IEA - June 2017 OECD discussion
The document discusses innovative business models in the energy efficiency services market, highlighting a 11% reduction in global energy consumption since 2000 due to efficiency measures. It emphasizes the growth of investment in energy efficiency, particularly in the building sector, and the rising importance of energy service companies (ESCOs) that facilitate energy management and performance contracting. Key challenges include redefining utility roles, managing regulatory frameworks, and adapting to technological disruptions.
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Radical Innovation in the Electricity Sector – Brian MOTHERWAY- IEA - June 2017 OECD discussion
- 1. Innovative business modelsin the energy efficiency services market Dr. Brian Motherway
- 2. © IEA 2017 0 2000 4000 6000 8000 10000 20002015 TFC(Mtoe) Global energy demand reduction from energy efficiency Efficiency measures since 2000 reduced global final energy consumption by 11%, equivalent to the total consumption of the EU. Efficiency savings
- 3. © IEA 2017 Efficiencyin IEA’s member countries has flattened demand Without efficiency gains energy demand in 2015 in IEA countries would have grown by 1% annually surpassing the 2007 peak. Instead, energy demand is 1% below 2000 levels. 130 140 150 160 170 2000 2002 2004 2006 2008 2010 2012 2014 TotalFinalConsumption(EJ) Energy demand without efficiency Actual energy demand
- 4. © IEA 2017 Energyefficiency is a growing investment opportunity Investment in energy efficiency increased by 6% in 2015, led by growth in the buildings sector 53% 18% 29% 25% 13% 6% 10% 9% 9% 15% 13% Building envelope Heating, ventilation and cooling Appliances Lighting Energy-intensive industry Other industry Light-duty vehicles Freight and aviation Buildings Transport Industry USD 220 billion Global investment in energy efficiency by sector, 2015
- 5. © IEA 2017 TheESCO market is important for energy efficiency services The global energy services market was USD 24 billion in 2015. China’s market is growing 7% per year, US market doubled in 10 years, EU market had small growth United States USD 6.3 billion European Union USD 2.7 billion China USD 13 billion Other USD 1.9 billion Global energy service company revenues by country/region, 2015
- 6. © IEA 2017 Whatis an ESCO? • Energy Service Company – ESCO • Outsourcing thinking about or investing in energy supply, management and efficiency • An actor with some combination of expertise, time, technology and funding • Addressing market barriers to energy efficiency opportunities
- 7. © IEA 2017 •Remote monitoring and management of energy in commercial and industrial sites • Often based on shared savings or performance contracting • Becoming a common offering from energy suppliers Outsourcing energy management Renewable ESS Smart Device Heat, Cooler Pump Gas/Water K-iEMS ServerData Server DDC / PLC • Example: Korea Electric Power Corporation - K-iEMS a branded, proprietary integrated energy management solution - Consolidates control and management of equipment, including solar supply - Claims 20% energy consumption reduction
- 8. © IEA 2017 •Upgrade or technology projects focused on energy efficiency • Energy performance contracting – payment linked to savings • Range of performance links from small payment hold-back to long term revenue model • Can include complete outsourcing of energy services Energy performance contracting
- 9. © IEA 2017 •In many countries, utilities have legal obligations to meet energy savings • These savings can be directly from customers, via third parties, or sometimes traded as ‘white certificates’ • Third party companies are emerging to acquire and aggregate savings projects for utilities • Example: Effy, France - Aggregates home efficiency upgrade projects to sell the ‘savings credits’ to utilities - Brings the value of the energy savings credit into the transaction - Also offers brokering services between householders and upgrade contractors Supporting utilities to deliver energy savings
- 10. © IEA 2017 •Using technology to create reliable, real time data • Exploiting the value of energy efficiency through a range of channels • Opportunity to increase accuracy and enable aggregation for energy efficiency to be paid for system adequacy Monetising energy savings • Example: OpenEE, California: - Paid-for-performance arrangements allowing utilities procure energy efficiency as a resource - Sends price signal based on grid benefit by tracking time and location dependent savings - Uses various monetisation channels
- 11. © IEA 2017 Thinkingabout energy as a service London-based BBOXX delivers energy systems to remote off-grid African locations. • The system is designed not to provide a certain quantity of energy, but to deliver the required services. • The package includes super-efficient lights, TV, radio and phone chargers supplied by a solar panel with battery storage. • The system is charged on a monthly service fee basis through mobile phone.
- 12. © IEA 2017 Discussionissues • Redefining the utility • From supply and demand to energy service • New markets for a new commodity • The disruptive potential of technology • Winners and losers in change
- 13. © IEA 2017 Someregulatory challenges • Enabling innovation • Managing new value streams • The utility’s business model • Paying for infrastructure • Distributional issues • Stranded assets